From 1 July, two first-time superannuation opportunities present
themselves. The first allows older, retired Australians to potentially
make additional contributions to super, while the second may allow
additional after-tax and salary sacrifice contributions to be made
during this financial year.
From 1 July 2018, if you have a total super balance of less than
$500,000 on the previous 30 June and you make or receive
concessional contributions of less than the concessional contributions
cap of $25,000 pa, you may be able to accrue unused amounts for use
in subsequent financial years.
2018/2019 is the first financial year you can carry forward unused cap
amounts and these amounts can be used from 1 July 2019. Unused cap
amounts can be carried forward for up to five years.
Before this change to the law, the concessional operated on a year-by-
year basis – any unused amounts from a previous year could not be
carried forward and used in subsequent years. You either used it, or
you would lose it! Practically speaking, the first year that you can take
advantage of this reform is 2019/2020 (for any unused 2018/2019 cap).
EXAMPLE – Carry-Forward Concessional Cap
Catelyn is a lawyer who earns $95, 000. As a result her employer
would normally contribute $9, 025 in Superannuation Guarantee
on her behalf. From 1 July 2018, she was on unpaid Maternity
Leave, and returned to work exactly 12 months later.
Under the old rules, unable to carry-forward her unused
concessional caps from previous years, in 2019/2020, Catelyn’s
concessional cap would be $25 000 and not take into account her
unused 2018/2019 cap.
Assuming she made no contribution while on Maternity Leave,
under the new rules Catelyn would be able to make a personal
contribution of up to $40 975 in 2019/2020 (the unused $25
000 cap + $15 975 of the unused 2019/2020 cap, taking into
account the $9 025 in Superannuation Guarantee paid by her
employer). This would give her extra capacity to catch-up on her
superannuation contributions that were not made during her time
off work – either by salary sacrificing, or making an after-tax
contribution for which she could claim a tax deduction. The
maximum amount of the tax deduction allowed in 2019/2020
would also increase by $25 000 (being the unused cap amount
from the previous year).
MY TAX SAVERS